|(Click the icon to view the outsourcing decision analysis.) InteliSystems manufactures an optical switch that it uses in its final product. InteliSystems incurred the following manufacturing costs when it produced 70,000 units last year: (Click the icon to view the manufacturing costs.) Another company has offered to sell InteliSystems the switch for $8.50 per unit. If InteliSystems buys the switch from the outside supplier, none of the fixed costs are avoidable. The company prepared an outsourcing decision analysis to show the cost per unit of making the switches versus the cost per unit of buying (outsourcing) the switches. InteliSystems needs 79,000 optical switches next year (assume same relevant range). By outsourcing them, InteliSystems can use its idle facilities to manufacture another product that will contribute $140,000 to operating income, but none of the fixed costs will be avoidable. Should InteliSystems make or buy the switches? Show your analysis. Complete the Best Use of Facilities Analysis. (Enter a "0" for any zero amounts.) InteliSystems Best Use of Facilities Analysis Buy and Use Facilities for Other Make Product Total variable cost of obtaining the optical switches Expected net cost of obtaining the optical switches (Click the icon to view the outsourcing decision analysis.) InteliSystems manufactures an optical switch that it uses in its final product. InteliSystems incurred the following manufacturing costs when it produced 70,000 units last year: (Click the icon to view the manufacturing costs.) Another company has offered to sell InteliSystems the switch for $8.50 per unit. If Intel Systems buys the switch from the outside supplier, none of the fixed costs are avoidable. The company prepared an outsourcing decision analysis to show the cost per unit of making the switches versus the cost per unit of buying (outsourcing) the switch InteliSystems needs 79,000 optical switches next year (assume same relevant range). By outsourcing them, InteliSystems can use its idle facilities to manufacture another product that will contribute $140,000 to operating income, but none of the fixed costs will be avoidable. Should InteliSystems make or buy the switches? Show your analysis. Data Table Complete the Best Use of Facilities A Direct materials $ 560,000 Direct labor 105,000 Variable MOH 70,000 Fixed MOH 455,000 $ 1,190,000 Total manufacturing cost for 70,000 units Total variable cost of obtaining the op Print Done Done Expected net cost of obtaining the optical switches InteliSystems manufactures an optical switch that it uses in its final product. InteliSystems incurred the following manufacturing costs when it produced 70,000 units last year: (Click the icon to view the manufacturing costs.) Another company has off unit. If InteliSystems buy fixed costs are avoidable Data Table analysis to show the cos unit of buying (outsourci (Click the icon to view the outsourcing decision analysis.) InteliSystems needs 79,000 optical switches next year (assume same relevant range). By outsourcing them, InteliSystems can use its idle facilities to manufacture another product that will contribute $ 140,000 to operating Should InteliSystems Complete the Best Use InteliSystems Incremental Analysis for Outsourcing Decision Make Buy Unit Unit Difference Variable cost per unit: Direct materials $ 8.00 $ 0.00 $ 8.00 Direct labor 1.50 0.00 1.50 Variable overhead 1.00 0.00 1.00 Total variable cost of ob 0.00 8.50 Purchase price from outsider (8.50) $ 10.50 $ 8.50 $ 2.00 Variable cost per unit Expected net cost of o Print Done Done
